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Business Principles

CHICAGO AUTOMOBILE TRADE ASSOCIATION MEMBERS AGREE TO:

  • Promote and maintain honesty and dependability in our business operations and to avoid deception and fraud.
  • Employ truth and accuracy in our advertising and selling of automotive products.
  • Stand by any guarantee given with the sale and service of motor vehicles.
  • Strive constantly to improve our business methods and ethics and to maintain fair competition to the end that the public will be better served.
  • Refrain from the performance of any act which would be injurious or detrimental to the automobile-retailing industry or contrary to the public interest.

Letter from 2016-17 Chairman, John Hennessy

2017-18-CATA-Exec-Board
2017-18 CATA Officers (clockwise from left, Dave Sloan, John Hennessy, Ray Scarpeilli, JR., Tony Guido, Bill Haggerty and Kevin Keefe.
 
DEAR FELLOW CATA MEMBER:
 
I had the pleasure of leading this association exactly 40 years after my father did, and I can corroborate the pride he felt in doing so. It has been a pleasure indeed. Much was accomplished, as our industry is enjoying a strong period; for the past seven years have been the longest period of new-vehicle sales growth since the 1920s.
 
At this writing, just days remain in the collective bargaining agreement under which dealers operate with their unionized technicians. I can't predict where negotiations will end, but I hope it is at a place that is agreeable to all. The firm that since 2002 has negotiated the collective bargaining agreements with Local 701 on behalf of the dealers, Franczek Radelet, has been effective both in the negotiations and in deflecting unionization attempts. Since 2014, the area has seen such attempts at 12 dealerships. The firm represented eight dealers and had a record of 8-0; the other four dealerships used other attorneys and went a combined 0-4.
 
Also at this writing, we await action by Illinois Gov. Bruce Rauner on legislation before him that would forbid manufacturers from demanding a dealership remodel twice within a 10-year span. Rauner must act on the bill by late August 2017.
 
The measure also would prohibit manufacturers from forcing a dealer to use a manufacturer-designated vendor for building-improvement materials if the dealer can find substantially similar materials at a lower cost. It also would require a manufacturer to consider local factors in the dealer's market area when evaluating a dealer's sales performance as part of the termination process, and it would halt the manufacturer from exercising a right to buy the franchise from a selling dealer unless several steps are taken.
 
Confusion surrounded another law that took effect July 1, 2017, when Illinois dealers were compelled to extend a 15-day/500 miles implied warranty on powertrain components for most used vehicles. While the public act behind it was finalized in August 2016, lawmakers realized just weeks before the effective date that its language was unclear both about what must be covered by the warranty and where the boldfaced language referencing the warranty should appear among all the paperwork presented to a customer at closing. Rauner finally signed clean-up language legislation on June 30, just hours before the new law took effect.
 
And in action akin to Sisyphus, Illinois Sen. Jim Oberweis again introduced legislation in 2017 to open dealerships for sales on Sundays. It marked the fourth time since he became a state senator in 2013 that Oberweis, R-Sugar Grove, attempted to tinker with dealership operating days. Happily, his bill did not gain traction in Springfield. The Illinois blue law, which took effect in 1984, prohibits vehicle sales on Sundays, and few dealers support changing the law.
 
The CATA board of directors recognizes the importance of supporting political action committees that advance the interests of dealers, so we voted last year to compel ourselves to each contribute $3,000 annually to NADA PAC, and we encourage other dealers to contribute. Offerings from dealers in Cook, Lake (Illinois) and DuPage Counties in 2016 exceeded the year's goal by 54 percent. Contributions can be made using personal checks or credit cards; payments by a company are not allowed.
 
The money is used for the variety of issues before Congress, such as a growing Consumer Financial Protection Bureau. A 2013 CFPB directive has impacted the auto loan market, yet it was issued without prior notice, public comment or a hearing. Based on its actions, many dealers say they don't think the CFPB even understands their business.
 
In Illinois, the CATA this year funded its CATPAC budget with $155,500, to gain a voice with state and local lawmakers.
 
The association's benevolence on behalf of its members continues. The CATA donated $10,000 in September 2016 to an emergency relief fund to help victims of extensive flooding in Louisiana. Thousands of dealership employees and their families suffered devastating losses in the wake of the worst U.S. natural disaster since Hurricane Sandy in 2012.
 
The association also funds the Chicagoland Dealers Care program. Directors in the last year approved $1,5000 donations to the Boy Scouts of America Three Fires Council, based in St. Charles; to the Crystal Lake Food Pantry; and to Loaves & Fishes Community Services, in Naperville. The donations followed contributions to those entities by Joe Cotton Ford, Courtesy Buick-GMC, and the Continental Motors family of dealerships, respectively.
 
The relationship of our dealer body with the USO of Illinois continues to flourish. In four July campaigns, CATA dealerships generated $422,000 for USO programs that support deployed troops; military families; wounded; ill and injured troops and their caregivers; and families of the fallen.
 
The total raised from 2017 efforts, the fifth July, was not available at the time of this writing, but it is expected that the 105 participating dealers raised more than the $166,000 collected in 2016.
 
It does not at all surprise me that CATA dealers keep surpassing previous fundraising totals. What some might not recognize is that dealers are already deeply rooted within their communities and constantly strive to make a difference. The CATA's partnership with the USO of Illinois is a natural fit and a cause that dealers can appreciate and, demonstrably, fully support.
 
And don't forget First Look for Charity. The black-tie fundraiser held at the Chicago Auto Show raised more than $3 million in 2017 for the first time. The proceeds are distributed to 18 area nonprofits, and the CATA underwrites the catering and other ancillary costs. In its 26 editions, the event has raised nearly $48 million for charities to pursue their missions.
 
On the advertising front, the association dedicated about one-third of a $1 million budget in 2017 for its "Lease You Can Do" campaign to promote the advantages of leasing from the area's new-car dealers. Leasing activity in Illinois lagged much of the nation until the state's revenue department changed the taxation method effective Jan. 1, 2015. Lease penetration increased immediately, and now leases are close to 30 percent of vehicle transactions in northeast Illinois. And if Chicago is exempted from the equation, lease penetration jumps to 35 percent.
 
CATA officials have had numerous discussions with Chicago about eliminating its 9 percent use tax on leased cars, which causes the drag, and we continue to push the city to end that tax.
 
The Better Business Bureau, which monitors the advertising of dealers, continues to remind dealers that they must not advertise vehicles at a price that incorporates any limited rebates, for which not all consumers may qualify; all customers must be able to buy a vehicle at its advertised price.
 
The BBB's advertising review program, which was created jointly by the Bureau and the CATA in 1996, helps to maintain a level playing field for all dealers. The BBB also uses secret shoppers to verify that all customers qualify for advertised prices.
 
As the list of vehicles nationwide with an unfixed safety recall grows-an estimated one in four in the U.S.-dealers similarly are left with used cars they shouldn't sell until the problems are fixed. Beware of executing a Hold Harmless Agreement with potential purchasers. Such a document might protect the dealer against issues with the purchaser, who signs it, but what of any potential passengers? Indeed, what the Agreement does is establish that the dealer has actual knowledge of a defect. It appears the only way to protect against a potential lawsuit is to hold such a vehicle until it is fixed.
 
The area's new-car dealers were challenged over the past year by opportunistic car thieves who tried to steal any vehicle at a dealership with which they could match an ignition key. Daytime, nighttime, it didn't seem to matter to the thieves, who tended to travel in packs of six or more and seemed to have originated in Chicago. Crimes at first were limited to that city and immediate suburbs, but as the sprees got the attention of the dealer body, the thieves widened their targets to stores in the far western and far northern enclaves.
 
During business hours, thieves jumped into cars waiting to be serviced, and even drove away in freshly washed luxury cars. "They had a mission," said one victimized general manager. "They walked right up, got in the cars and left like they owned them."
 
Even when keys were removed from vehicles, some thieves acting overnights managed to break into lockboxes for the keys.
 
The CATA has been a vocal advocate in trying to overcome the crimes, going so far as to produce window stickers (the pictured decal) for concerned members to display. The association also hosted a presentation about how dealers can protect their properties. Speakers included former Chicago Police Supt. Garry McCarthy. Dealers are urged to review their policies about safeguarding vehicle keys -- don't leave cars unattended, don't leave cars running, don't leave keys in cars -- and then follow those policies. Instances of dealer attacks have quieted in recent months, as the gangs have turned their attention to car-rental lots and other businesses.
Forecasters expect another year of near-record sales in 2017. My best wishes to all our members for success in the year ahead!
 
Sincerely,
John Hennessy, 2016-2017 Chairman